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How coronavirus has affected credit scores
  • Credit Score

The Corona-Crisis has lead to many Australians to look at options for financial assistance; many for the first time. Many people who have been stood down are just ignoring their debts. There are others have who spoken to their creditors about financial hardship, and pursued options like 3-6 month loan payment holidays, or reduced repayments. Many of these options may impact your credit score and your ability long term to obtain credit.


A credit score is provided by credit rating agencies to lenders in order for them to evaluate your ability to repay debt. A good score is about 625, an excellent credit rating is above 800. People with a credit score below 625 will generally have to pay higher interest rates, those with below 550 may have to pay up to 7% more for a loan.


Credit scores are based on many factors including:

  • how many applications for credit you've made and how often
  • what loans you have (personal loans, payday loans, secured loans, etc.)
  • what credit cards you have
  • how much of the credit limit you use
  • whether you make your payments on time
  • which lenders you use
  • how often you move house
  • what suburb you live in
  • others...

Things like applying for a payday loan are not good for your credit score.
Taking advantage of the payment holiday will not in and of itself cause problems with your credit score according to the Australian Banking Association. However, in the long term, we believe it may. You will use more of the credit available to you, you will have debt for longer, and after the payment holiday, payments are likely to be higher, which puts you at greater risk of missing a payment.


It's important that if you are struggling with your debt now, and you haven't been affected by COVID-19, that you do not put off doing something about it. Likewise, if you can afford to make your payments, it is important you continue to do so.

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